Entries to Natural Order are dedicated to promoting an open & free society.

Monthly Archives: February 2016

One of the reasons that central bankers are desperate for rising price levels is so that the biggest debtors, governments, will see the burden of their debt diminished. This outcome involves defrauding creditors that is also being pursued by currency devaluations/wars that may eventually lead to outright default.

As a cover story for this subterfuge, central bankers insist that indebted individuals will benefit from relentlessly rising price levels. But this claim ignores the offsetting effects of “financial repression” whereby obscenely-low interest rates punish savers, especially pensioners and other groups that live from savings.

Meanwhile, assertions of the dangerous effects of deflation overlooks the most obvious of realities. That is that after the popping of a massive asset-price “bubble” with wildly distorted prices that overshoot underlying values, prices should go down!

Meanwhile, artificially-low interest rates spawned a global glut of liquidity that has contributed to rising excess capacity in many industries that puts a lid on prices or put downward pressure on them.

At the same time, central bank policy sparked the “financialization” of the economy in that most capital is being diverted to financial instruments (bonds, etc) rather finding its way into the “real” sector where factories are built & jobs created. With few new jobs being created, it is no surprise that aggregate demand has slumped.

Virtually all of the current economic and financial problems can be traced to central bank policies that caused a proliferation of bubbles and are now responsible for the continuation of economic malaise.